ABM2 (Statement of Financial Position)

Statement of Financial Position

​Financial Statements

​Financial statements are a structured representation of the financial position and financial performance of an entity. The objective of financial statements is to provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions.

​Financial Statements

​Financial statements also show the results of the management's stewardship of the resources entrusted to it. To meet this objective, financial statements provide information about the entity's:

1. ​assets;

2. ​liabilities;

3. ​equity;

4. ​income and expenses, including gains and losses;

5. ​contributions by and distribution in the notes, assist

​

​This information, along with other information in the notes, assists users of financial statements in predicting the entity's future cash flows and, in particular, their timing and certainty.

​Financial Statements

​A complete set of financial statements comprises:

1. ​a statement of financial position as at the end of the period;

2. ​a statement of comprehensive income for the period;

3. ​a statement of changes in equity for the period;

4. ​a statement of cash flows for the period;

5. ​notes, comprising a summary of significant accounting policies and other explanatory information; and

6. ​a statement of financial position as at the beginning of the earliest comparative period when an entity applies an accounting policy retrospectively or makes a retrospective statement of items in its financial statements, or when it reclassifies items in its financial statements.

​Review of balance sheet elements

​Assets - An asset is a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity.

​

​Liabilities - A liability is a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits.

​

​Equity - Equity is the residual interest in the assets of the entity after deducting all its liabilities.

​The balance sheet and accounting equation

​The balance sheet and accounting equation

​Statement of Financial Position

​Current assets

​An entity shall classify an asset as current when...

• ​it expects to realize the asset, or intends to sell or consume it, in its normal operating cycle;

• ​it holds the asset primarily for the purpose of trading;

• ​it expects to realize the asset within 12 months after the reporting period; or

• ​the asset is cash or a cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

​Noncurrent assets

​All other assets (that are not current) shall be classified as noncurrent assets

​Land improvements

​

​Current liabilities

​An entity shall classify a liability as current when...

• ​it expects to settle the liability in its normal operating cycle;

• ​it helps the liability primarily for the purpose of trading;

• ​the liability is due to be settled within twelve months after the reporting period; or

• ​it does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

​Noncurrent liabilities

​All other liabilities (that are not current) shall be classified as noncurrent liabilities.